The rapid acceptance of the Internet has been accompanied by a shift from simple advertising to the actual selling of products. Products can be sold over electronic media without intervention by a human salesperson, reducing sales costs. Large electronic commerce companies such as Amazon.com of Seattle, Wash. have pioneered selling of standard products such as books, videos, and toys to consumers over the Internet.
More complex products such as travel services are also being sold over the Internet by travel sites such as Travelocity, Preview Travel, and Expedia. Travel services differ from simple consumer products such as books in that many attributes of travel must be specified. For example, a buyer must specify days and times of travel, departing and destination airports, class of service, seat locations within the plane, and preferred airline. Often the travel sites will list alternative flights from several airlines, allowing the buyer to select his exact flight. The buyer may then go on to select a hotel and rental car.
The travel services purchased are thus a complex product that can be defined by many attributes—flight day, time, airline, seat, hotel, rental car. Travel sites use special software to guide buyers to select from among the many alternative attributes of travel services offered by many travel-service providers.
The prices for the travel services purchased from the travel sites are fixed by the sellers. While the buyer can adjust attributes to change the purchase price, the price for a travel service with a particular set of attributes is pre-set by the travel providers (sellers). Thus the travel sites, while selling complex, multi-attribute products, have a built-in bias that favors the seller.
Some travel-auction sites allow buyers to specify the price they are willing to pay for a travel service. Forward-auction travel sites, such as SkyAuction.com and Egghead.com (formerly OnSale.com), specify exact products and allow users to bid against each other for the travel specified by the travel site. Thus the seller specifies the attributes of travel, while the users specify the price. Some auctions may allow the winning bidder to select travel dates from among a range of dates, but the attributes that the buyer can specify are much more limited than on the standard travel sites.
Reverse auctions have been described in a number of patents by Priceline.com, such as U.S. Pat. Nos. 5,794,207, 5,897,620, and 5,797,127 by Walker et al. The Priceline travel service allows a buyer to specify travel dates and price, while the sellers specify other attributes such as travel time, seat location, and connecting flights. The service may suggest prices and urge the buyer to raise his price to better match desired seller prices that are otherwise hidden from the buyer. The buyer is not able to specify attributes that may be critical to him, such as travel times or non-stop flights. The Priceline system is thus biased toward the buyer in price, but biased toward the seller in attribute selection. Travel attributes are not selected based on the value that the buyer places on those attributes.
Other electronic trading exchanges have emerged for a variety of products ranging from commodities and air cargo to energy. These are typically single-attribute trading systems. For example, U.S. Pat. No. 5,845,266 by Lupien et al., and assigned to Optimark Technologies of Durango, Colo., matches buy and sell orders using a satisfaction density profile matrix. However, only one attribute, quantity, is specified in addition to price. See also U.S. Pat. No. 5,873,071 by Ferstenberg et al., and assigned to ITG Inc. of NY, which describes a negotiation-based commodities exchange. Multiple values of multi-attribute products are not specified by buyers and sellers though. Some systems, such as described in U.S. Pat. No. 6,035,289 by Chou et al., and assigned to IBM of Armonk, N.Y., matches buyers and sellers of air cargo based on as many matching attributes as possible. However, buyers and sellers do not specify values. There is no system to maximize values for both the buyer and seller.
Several other patents describe valuation systems, such as U.S. Pat. Nos. 6,026,384, 6,038,554, and 5,911,131. While valuation systems can assist buyers or sellers, such valuation systems are not integrated with a trading system. The valuation systems do not maximize value to both the buyer and seller.
What is desired is a trading system that maximizes value to both buyers and sellers. A neutral trading system that is not biased toward the buyer or the seller is desired. A multi-attribute trading system for complex multi-attribute products such as travel services is desired. It is desired to set the trading price based on a spread between values inputted by buyers and sellers. A trading system that maximizes the spread between buyer and seller values is desired. The spread is maximized by selecting from among multiple attributes of the product traded to find a specification of attributes that maximizes a spread or difference between a buyer-specified value and a seller-specified value. An integrated multi-attribute, spread-maximizing trading system is desired.